Evidence of Actual Confusion Is Not Determinative in Trademark Infringement Cases

May 26, 2017

Written by Dominique T. Hussey, L.E. Trent Horne and Jeilah Y. Chan

To succeed in a trademark infringement case, a plaintiff must prove a likelihood of confusion—that a casual consumer would likely be confused into thinking the source of the defendant's products or services is the same as or associated with the plaintiff. Evidence of actual consumer confusion is not required. And when evidence of actual confusion is presented, it does not trump the other factors; it is just one factor to be weighed in the confusion analysis.

Case

IP Type

Trademarks

Summary

Venngo Inc. offers discount, benefit and incentive programs to Canadian companies and professional organizations. Its client organizations can then offer discounted services such as car rentals, hotels and spas to their employees as benefits in addition to monetary compensation. These additional perquisites are almost universally referred to as 'perks'. Venngo adopted and registered a family of 'perks' trademarks, including WORKPERKS, MEMBERPERKS, ADPERKS and PARTNERPERKS.

Concierge Connection Inc. (CCI) is Venngo's major competitor. CCI uses the trade name and trademark PERKOPOLIS in association with its competing services.

Venngo sued CCI in the Federal Court for trademark infringement. It alleged that there was a likelihood that consumers would confuse PERKOPOLIS with Venngo's 'perks' marks. At trial, Venngo introduced evidence from witnesses who mistakenly believed that PERKOPOLIS was a Venngo program. Venngo argued this evidence was dominant in assessing the issue of a likelihood of confusion.

The trial judge held that while actual confusion is a surrounding circumstance to be considered, it is not a “trump card” that overrides other applicable factors, such as the resemblance between the parties’ marks, inherent distinctiveness of the marks, the length of time the marks have been used and the nature of the services and trade. The trial judge, following the Supreme Court decision in Masterpiece, assessed these factors, starting with resemblance. The trial judge found the resemblance and inherent distinctiveness factors to favoured the defendant.

The trial judge did not find the evidence of actual confusion sufficiently compelling to outweigh the other factors and surrounding circumstances. Although the witnesses may have connected PERKOPOLIS to Venngo because it included the term “perk”, the Court was wary of providing broad protection to a trademark that used descriptive or highly suggestive words as a basis for a claim of distinctiveness and alleged confusion.

As a result, notwithstanding some limited evidence of confusion, the trial judge was unconvinced that a casual consumer somewhat in a hurry would confuse the Venngo and CCI marks; Venngo's action was dismissed.

The decision was upheld by the Federal Court of Appeal. The Court of Appeal reiterated that evidence of actual confusion does not calibrate the weighing exercise; it is one factor to consider when determining if there is a likelihood of consumer confusion.

Notably, the Federal Court of Appeal also upheld an evidentiary ruling at trial that excluded some hearsay evidence on actual confusion. Venngo unsuccessfully attempted to introduce evidence from one of its employees who had attended a trade show and intended to repeat statements made by others about conflating the Venngo and CCI programs. This was a straightforward application of hearsay principles, but reinforces the practical difficulty of proving actual customer confusion when many litigants are loath to bring their actual or potential customers into the fray of litigation.

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